Vancouver-based Active Impact Investments has held a $110-million CAD final close for its third early-stage climate technology fund.
The fund is co-anchored by new investor Northleaf Capital Partners and returning major investor Fondaction. Fund III is nearly double the size of Active Impact’s second fund, and brings in fresh institutional backers such as Boann, Co-operators Corporate Venture Capital Fund, Deloitte Ventures, and InBC.
“We see Canada quickly emerging as a top destination for building climate tech companies.”
Active Impact secured more than $70 million in initial commitments for the new fund back in November 2023 during a difficult period for fundraising.
At the time, Active Impact was targeting to close the fund with $120 million in early 2024.
In an email statement to BetaKit, founder and managing partner Mike Winterfield said that Active Impact is proud to more than double its assets under management (AUM) while its contemporaries are pausing raise plans. He added that the firm had the option for a six-month extension to reach its fundraise target, but decided they already had enough money to run their strategy.
“Fundraising is one of the core jobs as a VC, but it’s the job that contributes the least to our performance,” Winterfield said. “Our success is measured by the returns we generate for our investors and that’s where we’re putting our full attention.”
Founded in 2018, Active Impact set out to help fill the seed-stage climate tech gap and build an “institutional-grade” VC firm. Now with over $180 million in AUM, Active Impact has invested in 39 companies across North America, exiting seven of those through acquisitions.
The firm invests in startups developing tech solutions in the areas of the circular and shared economies, clean energy and transportation, infrastructure and carbon solutions, and sustainable food and water.
Winterfield confirmed to BetaKit that the fund’s philosophy hasn’t changed since its initial close, other than intending to back five more companies than previously planned. Fund III’s cheque sizes will typically range from $1 million to $4 million, and Active Impact will lead rounds, help price them, and take board seats more often than not.
Active Impact has already invested $17 million from Fund III into seven companies, including Canadian startups Jetson, Skyward, RIPTK, and ThinkLabs AI, as well as the US-based C.Scale, Lumo, and Zeno. The firm plans to add 18 more companies to the fund’s portfolio, most of which will be based in Canada with some allocation in the US.
“We see Canada quickly emerging as a top destination for building climate tech companies with world-class affordable talent, strong public support, effective policies like IRAP and SR&ED, and globally respected and stable leadership,” Winterfield said in a statement, referring to Canada’s Industrial Research Assistance Program and Scientific Research and Experimental Development tax incentive program.
The VC firm also noted that a “greater influx of talent” is expected to come to Canada due to US policies on immigration and academia. The US Government has been threatening to withhold federal funds from universities if they do not comply with demands such as removing diversity, equity, and inclusion programs. Winterfield said that “diversity drives innovation.”
“When you create an environment where top minds from around the world can collaborate and build freely, the quality and scale of innovation improves dramatically,” Winterfield said. “For Active Impact, this trend means a deeper, more diverse pipeline of high-potential climate tech startups, enriched by fresh perspectives and technical excellence.”
“Like any good recruiter, Canada should be out courting exceptional, proven founders and the world’s top minds to build their companies here,” he added.
Feature image courtesy Active Impact Investments.